More on my fiction writing

March 11, 2009

Phoenix and Mesa dementia

As the Great Disruption rolls across the globe, changing everything, Arizona slips ever deeper into unreality. And that's saying something. Mesa's notoriously anti-everything voters approved -- by 84 percent -- using tax incentives to lure what the Republiccalls "two massive upscale resort projects." Meanwhile, Phoenix Mayor Phil Gordon is due to "outline an ambitious strategy to make Phoenix the first carbon-neutral city - and the greenest - in the entire country." And what will the strategy, to be unveiled in today's State of the City speech, include? Providing bicycle rentals. Installing solar panels on city buildings. "Developing Phoenix's canal system for recreation and business use similar to the Tempe Town Lake area."

Where to begin? What's most remarkable is how Arizona is willfully ignoring three mortal perils: water, global warming and the rising possibility that it could have one of the world's failed states on its southern border. Oh, the relatively lesser perils remain as well: the growing underclass, the horrible schools, linear slums, income inequality, inadequate infrastructure, serious environmental damage and the health consequences that follow, etc. There's little realization that the props that held up the old growth machine are gone, done, over. I know: Let's build "two massive upscale resort projects!"

Mesa is a classic example of what happens when the Kooks gain total control of a place. Every low-tax, low-regulation, "don't interfere with the market," cut-government policy has been enacted there -- and the place is a basket case. With more people than cities such as Minneapolis and Cincinnati -- Mesa's got nothing to show for it. For example, Cincinnati has three (real) universities within the city limits. Mesa has a community college. Worse, with its large population and lack of economic development, Mesa is a net drag on the regional economy.

Maybe the massive "yes" vote for the Gaylord development tax incentives is a sign of how afraid people have become as the metro Phoenix economy has nosedived into depression. But just like every other burg there -- including benighted Maricopa -- the answer is to try to emulate Scottsdale. It does not seem to have occurred to the good ole boys running Mesa, or Mesa voters, that the tourism economy is tanking in this recession and won't be coming back anytime soon, maybe not ever in the old form. One Scottsdale is enough -- and the economic infrastructure of resort tourism there has been abuilding for nearly 50 years. In any event, tourism provides crappy jobs and a very limited spot in the world economy. And why would you want to go on vacation at a place out in the middle of suburban nowhere, near the peaceful setting of Phoenix-Mesa Gateway Airport? (and this is way, way, way out, barely a part of Mesa).

Mesa could have used tax incentives, especially during the boom, for a host of productive, scalable and sustainable projects that would have created jobs that paid above-average wages. It chose not to. Now it wants to compete with Scottsdale and every Scottsdale wannabe in an oversaturated market. Well, as usual, somebody is benefitting from this deal -- just not the city or the majority of its citizens.

Then, Gordon's "green plan." Is this a joke? The city of Phoenix consists of 500 square miles of mostly low-density subdivisions dependent on single-occupancy car trips. Its transit system is wildly inadequate and has cut its hours of service to Hooterville levels. The city continues to encourage distant "office parks" and developments that not only eat up desert and the remaining farmland but are dependent on single-occupancy car trips.

The light rail system begun under Gordon's predecessor is a success. But the city is unwilling to take the steps to break the hold of the land bankers and get transit-oriented development going in the central corridor. By city policy, shade trees and grass are replaced by gravel and spindly palo verdes -- and, of course, endless vistas of asphalt and concrete. No city doing this can be "green," whatever carbon default swaps the bean counters cook up to bundle and sell through Merrill Lynch. Solar power? That industry left Arizona long ago and won't come back, like some boob from the Midwest, "just because we have sunlight." Use the canals "to be like Tempe"(how pathetic)? Just wait until the Salt River Project leaves your carcass bleeding in a back alley.

Is this a joke?

Gordon is a master of the optimistic speech about nothing -- how many times have I heard them (remember the one unveiling the W Hotel that died a slow, embarrassing death?). If he were serious, knowing the temperature has gone up 10 degrees in his lifetime and that global warming is a lethal menace to Phoenix, he would:

Call a moratorium on all new "greenfield" development. That shouldn't be hard with the depression. Let the lawyers fight it out. If they lose, make greenfield development impossible through a host of reviews, permitting nightmares, etc.

Tax the land bankers so they will either pay at a rate to offset the blight their land causes to the city, or sell to developers who will actually do projects along and near the light-rail line.

Greatly expand bus service and hours, including to the far-flung office developments. Fast-track expanded light rail and start commuter rail service to the suburbs.

Tax people on the number of miles they drive (transit would look mighty appealing).

Establish parts of the city that are shade oases, as is the case in north central and the area around Encanto Park. Create small oasis parks all over. Make the water investment to plant and sustain grass and shade trees in these areas. Plant shade trees all over downtown.

Comments

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The most ironic part about the Mesa plan is that it shows that its residents aren't ideologically opposed to new taxes, otherwise they would have rejected this also. They appear to just be too selfish and/or cheap to fund their own city's development and found a way to pass the buck.

Phoenix has its own real-estate stress and the fallout will intensify over time. As described by Jon for years, virtually everything west of 19th Avenue is a huge linear slum. The Maryvale area, in particular, warrants concern. This is another aspect of unsustainable development, where people live in expensive-to-maintain houses and require cars to negotiate the long distances to work and shopping.

I live close to an old apartment complex, once the largest in Phoenix, called Park Lee. There are over 500 units here in what was once a very pleasant environment. The apartments were solidly middle-class but as central Phoenix has deteriorated, so has this complex. Now, the landscaping isn't being maintained and about half the units are empty. There's something both forlorn and fascinating about this scene.

The problems Phoenix are facing might be minor compared to those of an aging rust-belt city like Cleveland. But what we're seeing there might tell us something about Phoenix's future. The job base here is declining, the housing stock is aging, and for the first time in history, Phoenix's population is probably declining. We have better weather but our water situation is subject to the whims of an increasingly hostile climate. In countless ways, the freshness and promise of Phoenix seem relics of another era.

I don't know if Phil Gordon thinks about this much because if he does, he might find a way to get a job in Washington. The real-estate collapse means Arizona's main economy is now depressed for the indefinite future. Before, real estate was our salvation, a fail-safe way to make money and pay the bills for the metastasizing underclass. Now it's all a shambles. What's going to happen to Phoenix? It's not to soon to wonder.

In view of great disruption across the globe Phoenix Mayor Phil Gordon has great strategy to make Phoenix the first carbon-neutral city and the greenest in the entire country.In my opinion this idea should circulate around the whole world to make the earth as good as heaven.

Re "cooling surfaces", according to Hashem Akbari, a physicist with the Lawrence Berkeley National Laboratory:

"Globally, roofs account for 25% of the surface of most cities, and pavement accounts for about 35%. If all were switched to reflective material in 100 major urban areas, it would offset 44 metric gigatons of greenhouse gases, which have been trapping heat in the atmosphere and altering the climate on a potentially dangerous scale.

"That is more than all the countries on Earth emit in a single year. And, with global climate negotiators focused on limiting a rapid increase in emissions, installing cool roofs and pavements would offset more than 10 years of emissions growth, even without slashing industrial pollution."

Regarding mass transit, Phoenix saw a huge increase in ridership when gas prices were up, so much so that some local commentators called it a "paradigm shift" for the car-loving Valley. To some degree, increased ridership has persisted even with a decrease in gas prices, as consumers hunker down and try to reduce costs. You might imagine that administrators would encourage this, that indeed, the goal of MASS transit is to move as many people as possible and to thereby reduce the traffic problems, pollution, and expenses associated with private transportation, but no.

Phoenix has adopted what I call the "movie theater" business model: hike prices to maximize revenue, despite the fact that this reduces patronage. There was a time when families routinely saw not merely a movie a week, but frequently several movies a week. It was an inexpensive form of evening entertainment.

Then, theater owners discovered that it's possible to make more money with higher ticket prices despite the fact that this resulted in fewer tickets sold. The key was finding the right balance, since total profits = profits per customer times the number of customers. Note also that less customers means less screenings, less maintenence, and less general overhead expenses.

Now, transit authorities have adopted a similar model. They can increase revenues by raising fare prices, cutting bus service, and shrinking ridership. Note also that fewer trips means less overhead for fuel costs and maintenence/repairs. It means fewer employees are needed to handle the reduced ridership, which again increases revenues.

Increased revenues from fares are important to fiscally conservative Phoenix city planners because they don't require public funding. (That's only lavished on private sports stadium owners, the real-estate industrial complex, and other winners, not the general public.)

Don't forget that bad economic times offer excuses not only to liberals, but to conservatives, for doing the things they've been wanting to do but haven't had the political cover for.

The excuses used have been transparently false and change with each news story. At one point, fare hikes were blamed on increasing fuel costs over the preceding year. The only problem was, at the time this claim was made, gasoline/diesel fuel costs were actually lower than they had been a year earlier. (The Arizona Republic uncritically parroted Valley Metro's PR flacks, instead of spending a few minutes doing the online research necessary to refute it.) Furthermore, most of the Valley Metro bus fleet is powered by natural gas, and liquid natural gas prices were less affected by the oil shock to begin with.

Regarding shade trees, I note that Mr. Talton calls for them, in Phoenix, in special, limited areas, such as downtown and in "shade oases". This should be fine. Trees do absorb carbon dioxide and produce oxygen, and make neighborhoods more attractive and livable. They not only reduce the temperatures beneath their canopies, but also the ambient temperature of the very air in their immediate area.

The problem with broader use of shade trees and green plants is that they are water intensive: this is inconsistent with water conservation and management efforts in an area of low rainfall.

In fact, so is Phoenix itself. The area is a natural desert, and in order to do for Phoenix what Nature herself fails to do, enormous quantities of river water must be diverted for irrigation, not of farmland, but for lawns, residential citrus trees, golf-courses, and plants that are not native to the area and cannot survive on their own. Go to any local mountain park to see what the natural environment looks like: cactus and scrub.

There may come a time when "taming the desert" in this way will be looked upon as being as irreponsible as building habitats on flood plains or eroding cliffsides. Instead of wasting water resources to fight the desert and wasting fuel to provide the air conditioning necessary to make it livable, why not concentrate populations in temperate zones and use city design THERE (including plentiful shade trees) to make them livable and sustainable?

Turn the deserts into gigantic solar generating farms. (Note that this can also be done WITHOUT moving any populations.) Between economies of scale and technological refinements, solar collection and generation facilities covering the desert regions of Arizona, California, New Mexico, Texas, and elsewhere in the region, could power the entire United States electrical grid, and all its motor vehicles (if electrified).

Talk about "green jobs"! Imagine the trained, DOMESTIC workforce necessary to produce the products and provide the services needed first to create, then to maintain and repair, facilities spanning not merely large parts of entire states but of several such states in a region, and distributing the product (clean electrical energy) to the rest of the country.

For clean, free energy, the sun cannot be easily beaten. It's a huge nuclear furnace, located far enough away to make byproduct storage a non-issue, and it will last for billions of years.

Make the industry publicly owned and operated on a non-profit basis, and the cost of electricity would be low. Don't forget that "profit" represents a huge overhead cost that must be budgeted for in addition to operating costs, thereby adding substantially to the price of the product/service. And actual profit margins are proprietary information: companies can use whatever public relations line they want to justify their prices, and accountants know many tricks to cook the books without breaking the letter of the law.

Here's something else: sooner rather than later population control may also become a necessity, because land, water, and other natural resources are limited and their use must be managed so as to provide each individual with what he needs, not merely to survive, but to have quality of life. Limitations, whether absolute or practical, on water, energy, infrastructure, land, and social services may require it.

The need for population control, in turn, suggests the need for a whole new economic system, since capitalism as we know it requires expanding economies to be sustainable, but at present expanding economies are ultimately driven by population growth.

As for why capitalism requires expanding economies, I'll post something on this when time permits, in a subsequent comment, because it's rather interesting.

To comprehend why capitalism requires economic expansion to exist, and why capitalist economic expansion ultimately requires population expansion, it helps to consider a hypersimplified economy: small, super-simple, brand new, and considered from the year zero. It is not a realistic model, but one which isolates and clarifies the essential points for illustrative purposes.

There is one employer, the Mega Corporation, owned by the brothers Crassus and Midas. The Mega Corporation will provide all goods and services for this society. Apart from the two owners, this society consists of 1,000 workers (ranging from laborers to managers) and their families, with all workers employed by the Mega Corporation. The savings level is zero. The Central Bank, also owned by Crassus and Midas, has printed just enough money to pay the workers for a single month, $1,000,000 -- which is an average of $1,000 per worker, though some make more and others less than this. There are no imports or exports.

All economic activity consists of (a) actions of the Central Bank; (b) wages paid by the Mega Corporation to its workers; (c) purchases of goods and services from the Mega Corporation; (d) the income of the owners, derived from profits. Note that (c) includes consumption by Crassus and Midas, but that they receive no income until the Mega Corporation makes a profit.

Crassus and Midas decide on a mark-up of 20 percent: the retail value of the goods and services produced by the Mega Corporation is thus $1,200,000.

Note that there is a fundamental problem: in order to turn a profit, the Mega Corporation must sell goods and services whose total retail value exceeds the spending power of the masses, since the Mega Corporation's total labor cost of $1,000,000 is also the total wages of these worker-consumers and their families. How can the Mega Corporation make a profit when these wages support, at most, a non-profit (break-even) operation? The solution is: credit. Fortunately, the Mega Corporation has its own consumer credit department, called EZ Loans.

So, here is what happens in the first month: (a) the Mega Corporation pays its workers $1,000,000; (b) The Mega Corporation loans selected workers and their families $100,000; (c) the Mega Corporation turns a profit of $100,000 by selling $1,100,000 worth of products and services to the worker-consumers; (d) Crassus and Midas, the owners, split the profit evenly between themselves; (e) Crassus and Midas, using their personal cut of the profits, each buy $50,000 worth of products and services from the Mega Corporation, which thus sells all $1,200,000 worth (at retail value) of the goods and services produced by it in this first month of operation.

Note that each worker is paid an average of $1,000 a month to support himself and his family, but that Crassus and Midas are enabled to buy 50 times that much each, including expensive and high-quality luxury goods and the best of everything. So, Crassus and Midas live like kings while the worker-consumers get by and supplement their comparatively meager purchasing power by means of credit (which they must repay with interest).

Before continuing, pause and consider this:

(1) The primary purpose of an economic system, as revealed here, is to determine the distribution of the goods and services produced by that economy.

(2) In a capitalist economy, the mechanisms for this are: (a) private ownership of the means of production; (b) profit, called by some "the surplus value of labor"; (c) pricing vs. income levels; (d) credit.

Now, as for the matter of credit, it is crucial to examine this more closely, since it is central to the viability of the capitalist economy.

In the second month, the worker-consumer-debtors must begin making principal and interest payments on their loans. This is a problem, since these payments decrease the disposable incomes of those making them, thus decreasing consumerism and in turn decreasing the revenues of the Mega Corporation. (More on this below.)

Additionally, the same basic problem exists in the second month as in the first: how to make a profit. The workers are paid another $1,000,000 in wages the second month, and the retail value of the goods and services produced by them in this second month is again $1,200,000. In the first month the "profit problem" was solved by means of consumer credit loans, but this cannot, under current circumstances, be indefinitely repeated, since each additional borrowing means higher payments for principal and interest by the worker-consumer-debtors, which would mean continually decreasing disposal incomes for them, and thus continually decreasing consumption (see below), and that is not sustainable.

Another problem is monetary: if workers must consume at least $1,000,000 worth of products and services (at retail value) each month, merely for the Mega Corporation to break-even, then where is the money to make loan payments, additional to this, to come from, since $1,000,000 is all they receive as wages? The answer is that credit must ultimately be supported by an expansion of the money supply, in this case by the Central Bank. This leads to a third fundamental fact:

(3) In a capitalist system, profit pays the owners' incomes. Profit is made possible only by credit. Credit is made possible only via some authority (like a central bank) which can increase the money supply. Then, to the extent that the central bank is owned or controlled by the government, the incomes of the owner class are ultimately paid by the government. This is a kind of inverted socialism.

But this still leaves the problem of maintaining consumption while expanding credit. If credit expands at the expense of consumption, the ultimate result will be economic collapse. To the extent that credit redistributes income from debtors (workers) to lenders (owners) the owner class can to some degree take up the slack, increasing their consumption at the workers' expense, but this too has its limits (politically as well as economically).

Clearly then, some means must be found of expanding BOTH worker (mass) consumption and worker (mass) credit, so that an expansion of consumption supports the expansion of credit, if capitalism is to be sustainable.

This in turn requires the increase of real productivity (i.e., more goods and services must be produced). But productivity cannot in the long term be increased exclusively by means of wage cuts, because this makes mass consumption and the expansion of credit unsustainable. Nor, under capitalism, can productivity be increased by the use of machines which result in long-term, continuing reductions of the labor force, since worker-consumer-debtors who have no jobs AND no ownership of income producing assets do not draw an income, thus reducing rather than increasing mass consumption.

Clearly then, aside from better organization of the labor force (something which has its limits), the only solution (under capitalism) is to increase the number of productive jobs: and that in turn requires a population increase.

Can the population be increased indefinitely to support this economic expansion of ever greater consumerism, on which capitalism depends in the long term (bearing in mind that short term booms AND busts are intrinsic to it)? If not, then a new economic system will eventually be necessary.

To recap: population growth supports the increase of mass consumption, which in turn supports the expansion of credit (not the other way around), which in turn supports the existence of profits, which in turn supports the incomes of owners derived from those profits; and the expansion of the money supply, being necessary for the expansion of and repayment of credit, means that in the United States, the Federal Reserve System ultimately pays the incomes of the owner class; and unless population growth can be indefinitely sustained, the whole economic system is a gigantic Ponzi scheme.

I couldn't agree with you more about the need to tax the hell out of these land bankers. They come into the downtown buy the land, bulldoze the building sitting on it, get the city council to increase the height zoning requirement and flip the land. It is disgusting the Phoenix lets them get away with it. They come in and destroy our city and get rewarded for it.

Mesa has let way too many neighborhoods go in disarray and become crime ridden. Not sure what they can do since property is privately owned but other areas like Gilbert and Chandler found a way to succeed.